Heathrow, Stansted to get £500m

Heathrow and Stansted airports were told today that they will be getting a massive £500 million injection of cash.

The airports have been laid low by the worst airline recession in history and the cash will come mainly from their international owners.

The money is aimed at shoring up debt at the two airports and to enable continuing upgrades. In the latest alert to the dire state of the aviation industry — BAA's airports have in aggregate been losing passengers for 19 straight months — BAA announced its shareholders are to stand behind the need for a major cash injection.

Of the £500 million, around £100 million will come in new money from BAA's majority shareholder Ferrovial, the Spanish construction giant which has had its own financial problems back home.

Another £90 million is to come from Ferrovial's partners in the original takeover of BAA, the Canadian pension fund CDPQ and GIC the international investment arm of the government of Singapore. A further £150 million will come from money already invested by the shareholders.

The last £150 million is to come from within the BAA group which includes Edinburgh, Glasgow, Aberdeen and Southampton airports. It means that of BAA's cash reserves, £150 million is being directly pumped into Heathrow and Stansted.

In a statement BAA said: "The funding will be used to pay down debt, strengthen the group's medium-term financial ratios and facilitate its access to the capital markets.

"The injection furthers BAA's strategy of developing a long-term platform to finance its rolling programme of investment to upgrade its London airport facilities and improve service to customers."

It is understood BAA had to secure the new funding as a prerequisite to going to the bond market early in the new year to restructure its current debt mountain which — before the £1.5 billion sale of Gatwick — was around £10 billion.